GREENLAND : Council to look at vote on sales tax for schools
Posted on Monday, December 8, 2008
The Greenland City Council today will consider a special election to extend the city’s 1 percent sales tax for the benefit of its cash-strapped school district.
If the tax is extended, Greenland would be the second city to take advantage of a 1993 change in state law that allows city governments to channel sales taxes to school districts.
The Arkansas Board of Education in July voted to take over the Greenland School District, appointing a new superintendent and dissolving its School Board after projections showed it could end the fiscal year $ 427, 000 in the red.
State-appointed Superintendent Roland Smith has up to two years to correct the problems and avert a potential merger with one or more of six neighboring school districts.
Alderman Bill Groom, who was president of the School Board before it dissolved, proposed extending the sales tax, previously designated to a $ 203, 000 sewer bond, giving the money to the district for two years.
If approved by the City Council, a special election would be held next spring.
The sewer bond, designed to attract commercial development near Interstate 540, has been repaid, said city Treasurer Donna Cheevers, who has as- sumed mayoral responsibilities since Mayor John Gray was injured in a motorcycle accident in October.
Cheevers supports directing city funds to the district despite an unstable economy that has other cities fearful about balancing budgets.
“I feel like the school is part of the city,” she said. “If the school goes under, the city would probably go under, too.”
Cheevers is uncertain how voters will react to the proposed tax extension. The city likely will have additional sewer needs if construction picks up in the future, she said.
While the city covers 2. 7 square miles, the school district covers 143 square miles, extending into parts of Winslow, Prairie Grove and Fayetteville.
“But the people who pay this tax will mostly be people that don’t live here, who are driving through,” Cheevers said.
Smith, the superintendent, was hesitant to give his opinion on the sales tax, saying he didn’t want to pressure residents to pass it.
“But I’m very pleased with any initiative that would provide funds for the school,” he said. “It would help us make our case to the state board that the community wants to support these schools staying open.”
The tax extension is estimated to be worth about $ 100, 000 a year, nearly doubling the district’s projected reserves at the end of the current fiscal year.
After cutting staff by not replacing retiring teachers, renegotiating contracts and scrutinizing the district’s budget, Smith projects the schools will end the year with $ 135, 000 in reserves, a figure that could grow to $ 250, 000 at the end of the next fiscal year.
The district’s expenditures, tracked on a monthly basis, are down $ 464, 000 from this point last year, Smith said.
Washington County Assessor Lee Ann Kizzar reported the assessed valuation of taxable property within the school district grew by nearly 5 percent, which will add about $ 163, 000 to its budget.
Any additional money would be helpful, Smith said.
The state board will examine the district’s finances in January, state Department of Education spokesman Julie Johnson Thompson said. A decision about the district’s future could come as early as March.
“In the meantime, they’re studying whether it’s feasible to divide districts when annexing them,” she said. “It’s safe to say that, as soon as they think that [annexing the district ] is a necessary step, they would start putting that into place.”
The decision to use city sales tax for school district projects sparked a 1991 lawsuit from a group of Fayetteville residents, who successfully argued that it was unconstitutional for the city to issue revenue bonds to finance $ 10 million in construction and renovation for buildings in the Fayetteville School District.
The state Legislature in 1993 passed a bill that allows cities to appropriate sales taxes for use by their school districts.
Bald Knob is the only city to use the measure.
When the state board declared that district in fiscal distress in 2007, voters approved a 2 percent sales tax, providing 95 percent for the district and using 5 percent for a school resource officer.
The district collected about $ 245, 000 from the tax at the end of its fiscal year in June, Superintendent James Staggs said.
“At that point in time, it looked like the only way we could get a quick infusion of money into the district,” he said.
Before a state meeting to decide the district’s fate, patrons raised $ 1. 7 million in 30 days through steak dinners, auctions and events — even collecting $ 5, 000 through a “men’s beauty pageant” in which Staggs donned a woman’s evening gown and a plastic wig for the cause. The Bald Knob School District, once $ 2 million in debt, finished its fiscal year with a $ 1. 4 million surplus. “We’re probably in better shape fiscally than the district has been in 10 years,” Staggs said. While the sales tax wasn’t a large contributor to the financial situation, it provided assurance when fundraising goals seemed out of reach. “We didn’t know what would happen if we collected more than we needed,” he said. “But we knew all the what-ifs if we didn’t finish that year in the black.”
To contact this reporter: eblad@arkansasonline. com
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